School board eyes sinking fund millage for facility needs

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Kent Barnes, Superintendent fo...

HOLLY, Michigan - School buildings are like homes in many ways, Holly Area Schools (HAS) Superintendent Kent Barnes told the board of education on Monday. Sometimes schools need roof work, flooring or other maintenance, and a sinking fund millage would allow HAS to address some of the concerns it has with its facilities.

A sinking fund millage is a limited property tax, and considered to be a “pay-as-you-go” method, for addressing building remodeling projects. State law allows a district to levy up to five mills, for no longer than 20 years. Similar to a bank account, the district has access to sinking fund monies to pay for projects as they are completed, but will not pay interest on the money used.

The State of Michigan has legal requirements, restrictions and guidelines for public school districts that plan to fund capital enhancements or facility repairs through sinking fund millage levies. The law is very specific about what is considered an allowable use and what reporting and audit requirements are expected.

Barnes said the district can’t ask voters for the amount it actually needs, adding that it is unlikely that 3 mills would pass in an election. Instead, Barnes said HAS would more likely ask voter to agree to .9 to 1 mill.

Assistant Superintendent for Administrative Services, Steve Lenar said a 1 mill sinking fund would cost the owner of a home valued at $100,000 (with a taxable value of $50,000) approximately $50 annually, or about $1 per week. “It’s the cost of a pack of gum, a candy bar per week, or one Starbucks drink per month,” Assistant Superintendent for Instruction, Noni Miller added.

HAS voters approved bonds in 2002 and 2006, Lenar said. The bonds took place without any change in the millage rate.

With property values in the school district having dropped from approximately $915 million to around $750 million over the last three years, the sinking fund millage increase would add up to a slight increase to voters, and would appear on property tax bills, Lenar said.

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Steve Lenar

Lenar reiterated that school districts are limited in what they can pay for with sinking fund money as it cannot be used for day-to-day maintenance costs, wages, operations, technology or buses. What the monies can pay for, however, is the cost of maintaining the district’s many facilities.

“Sinking fund money can pay for things like parking lot and roof work,” Barnes said.

In order to provide voters with information about a sinking fund millage, Barnes said HAS must supply adequate, appropriate and effective communication about the district’s needs. “Community members often ask why the district can’t take money for expenses from other funds,” he said.

The district’s general fund has $1.5 million now, which wouldn’t cover its facility needs, Lenar said. A “savings account” doesn’t exist, Barnes added.

The sinking fund millage could come up on the ballot as soon as the August primary, or possibly in November, Lenar said. “The deadline is 90 to 120 days before the election to get the right ballot question approved and sent it to the right authorities running the election,” he said. Lenar said HAS would need to have the appropriate information submitted by April in order to get it on the August ballot, or by early summer in order for it to appear on the November ballot.

The district has been working with architects to show what 10 years of facilities needs will look like from 2013-2023, Lenar said. “We’re considering the age of some of the facilities, and putting the pieces into place to address some of the scheduled needs,” he said.

Holly High School is in its 13th year housing students, while Rose Pioneer Elementary School is currently 15 years old, Barnes said.

While school officials considered bringing a vote to the public on a bond issue in 2009, Barnes said it wasn’t the appropriate time to make the request.  “It might not be the best time now to ask voters, but the needs of the district dictate that HAS looks at it,” he said.

Trustee David Rath said it would be best to quantify the district’s need and get a clear understanding of it.

Lenar said he is preparing a tentative draft list of facility items the school district needs to address for the next meeting.  Additionally, he will obtain an official timeline for a ballot question for the August or November elections.

Barnes reminded board members that they will eventually need to prioritize the items found on Lenar’s list. “We can’t raise enough money to cover it all,” he said.